Source: U.S. Energy Information Administration, State Energy Data System and International Energy StatisticsNote: 2012 shares for Puerto Rico, U.S. Virgin Islands, Guam, and American Samoa based on 2011, the most recently available data. Data for the Northern Mariana Islands were unavailable.

Unlike the rest of the United States, energy consumption in island states and territories is almost entirely petroleum-based. These islands may soon be able to diversify their energy sources to include natural gas, because relatively low natural gas prices and new shipping technology may allow these islands to import liquefied natural gas (LNG).

America's islands—the state of Hawaii and the territories of Guam, the Northern Mariana Islands, and American Samoa in the Pacific and Puerto Rico and the U.S. Virgin Islands in the Caribbean—face unique energy challenges because of their physical isolation and lack of fossil fuel resources. They have long depended on imported petroleum products, which are easier to transport than other fossil fuels, to meet most of their energy needs, including electricity generation. As a result, given relatively high crude oil prices in recent years, residential electricity prices on the islands have been three to five times the average residential prices of electricity on the mainland (Lower 48 states).

Source: U.S. Energy Information Administration and Guam Consolidated Commission on UtilitiesNote: *Shows data for 2011, most recently available year.

High electricity prices on U.S. islands have also encouraged distributed generation from technologies such as rooftop solar panels and solar thermal collectors, as well as energy efficiency improvements that reduce consumption.

Both Hawaii and Puerto Rico have diversified their electric generation mix with the addition of coal plants, and Puerto Rico has one independent power plant operating on natural gas, imported as LNG at a terminal adjacent to the plant. The Puerto Rico Electric Power Authority has also converted a nearby petroleum-fired generating station to use LNG imported to that terminal and is planning to convert a second petroleum-fired station if federal approvals are received for a separate floating off-shore LNG receiving terminal. But LNG has not been an option for most islands because it is typically shipped in bulk carriers in quantities far greater than many island economies could absorb. Furthermore, LNG requires expensive regasification and distribution infrastructure.

The combination of relatively low natural gas prices and the development of standardized cryogenic (refrigerated) shipping containers means small amounts of LNG can now be trucked, railed, and shipped like other containerized cargo. Once received by ship, the LNG is connected to portable regasification units adjacent to electric power plants or industrial facilities. The containers are typically filled on the mainland at utility peak-shaving units or, more recently, at small-scale liquefaction plants built to serve transportation, industrial, and marine uses.

Utilities in Hawaii and industry in Puerto Rico are now testing the economics of small-scale LNG imports. Hawaii's first shipment using a standardized cryogenic container was completed in April, taking approximately 7,100 gallons (about 0.67 million cubic feet) of LNG from a liquefaction plant in Boron, California, through the port of Los Angeles to Honolulu, where it was regasified and injected into the Hawaii Gas distribution system. This LNG was the first nonsynthetic gas ever put into the system. Hawaii Gas typically makes a synthetic gas from a naphtha feedstock produced in one of Hawaii's two crude oil refineries.

Also this spring, power utility Hawaiian Electric took bids on having LNG delivered in similar standardized containers to eight generating plants on Hawaii's five main islands, requesting 800,000 metric tons (about 39 billion cubic feet) annually. The utility is evaluating whether LNG prices are sufficiently favorable to justify switching away from diesel and residual fuel oils currently used at some of its generating capacity.

In Puerto Rico this fall, two privately owned bottling plants in the island's industrial north will begin receiving containerized LNG shipments. The LNG will be procured through third-party suppliers from southeastern U.S. peak-shaving plants, shipped from Jacksonville, Florida.